Twice, Ms. Eisen exhausted her unemployment benefits before her check was restored by a federal extension. Last week, her check ran out again. She and her husband now settle their bills with only his $1,595 monthly disability check. The rent on their apartment is $1,380.
“We’re looking at the very real possibility of being homeless,” she said.
Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces – some embedded in the modern-day economy, others unique to this wrenching recession – might make it especially difficult for those out of work to find their way back to their middle-class lives.
Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.
Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed.
Ms. Eisen is certainly not alone. While the government officially reports that unemployment is under 10%, the fuzzy math in this figure doesn’t take into account a host of factors including those that are working part-time but can’t find full time work, those that have given up looking, and those that have already exhausted their state and federal unemployment benefits. The real unemployment number is closer to 22%.
In the past, recessions have lead to job creation and aggressive growth because of technological innovation. The 1990’s and early 2000’s saw recessionary periods that were followed by booms, but those booms were caused by the internet revolution. Today we have no such technological advancements on the horizons.
In what sectors, save government, will new jobs be created going forward? Just about all of our manufacturing and even simple jobs like customer service have been exported outside of the United States. And because American-based businesses want to remain competitive, they simply cannot bring those jobs back to the USA for a number of reasons including labor costs, mandated health insurance (Medicaid, Medicare) payments, and retirement savings (Social Security) payments they must make for each employee.
Thus, unless we see a new technological revolution in the coming years, there will be no jobs to be had.
The economy must create 100,000 jobs per month just so our unemployment rate stays at current levels. Instead, we are losing hundreds of thousands of jobs per month.
We will continue to see more unemployed in America for years, perhaps decades to come.
We would not be at all surprised to see the “official” figures at 15% – 20% in the future, with the unofficial numbers closer to the 30% mark, with somewhere in the area of one in three Americans being unemployed.
It is not going to be pretty.
This is a depression, not a recession or recovery.